New Miscellaneous Tariff Bill process provides duty savings opportunities for importers.

The Miscellaneous Tariff Bill (MTB) is legislation providing benefits to importers in the form of temporary duty reductions on qualifying goods. The MTB’s goal is to aid U.S. manufacturers by reducing duties on inputs (raw materials, parts, etc.), thereby cutting domestic production costs and increasing the competitiveness of U.S. manufacturers. However, MTB duty benefits have also been granted to imported finished goods. For example, the most recent MTB (which has since expired) granted duty benefits to certain shopping bags, basketballs and sports footwear.

From 1982 to 2010, Congress passed successive three-year MTBs providing duty benefits for over 1,000 different products. The last MTB expired December 31, 2012. Due to concerns in the Senate that the MTB duty reductions were prohibited “earmarks,” the legislation was not renewed until May 20, 2016 when the president signed the American Manufacturing Competitiveness Act of 2016, which created a new MTB process.

Just like the old MTB process, under the new MTB process duty reductions are intended to:

  • Be limited to non-controversial goods (e., goods with insufficient or no domestic availability and no opposition from domestic producers), and

  • Result in estimated duty relief with an annual impact of less than $500,000 in duties per MTB line item. In other words, the total duty reduction for all goods anticipated to be entered by all importers under a particular MTB line item must be estimated at less than $500,000 annually.

The new MTB process differs from that previously used because petitions will now be filed electronically directly with the International Trade Commission (ITC) and will not require sponsorship by a member of Congress. The ITC has dedicated a web page to the MTB process, which can be accessed at www.usitc.gov/mtbinfo.htm

Why Does The New MTB Process Matter?

As a result of the new legislation, the ITC has begun the process enabling the agency to gather petitions for proposed MTB benefits from numerous entities, analyze and vet the petitions, and put together a new MTB for submission to Congress. Under the new MTB process the window for submitting petitions to the ITC, which began October 14, 2016, will close December 13, 2016.  Thereafter, the ITC and other agencies will review and vet the information received, after which the ITC will compile the individual qualifying line items into the actual legislation (the MTB) for submission to Congress.  We anticipate that exercise will be completed in the fall of 2017 and submitted to Congress for a vote shortly thereafter. Assuming that Congress passes the MTB legislation, then importers of qualifying goods should start to see corresponding duty savings shortly thereafter. Expected MTB duty savings for all MTB line items are expected to exceed $700 million annually.

In the past, products of interest to PPAI members included shopping bags with an outer surface of spun bonded polypropylene fabric or nonwoven polypropylene fabric, containers for various products, certain manicure/pedicure sets, various erasers and certain decorative plates, plaques and sculptures, among other items. Whether these items or other goods of interest to the promotional products industry will be included in the new MTB and if so, the corresponding MTB duty reductions, remain open questions.

The New MTB Process

As of October 14, 2016 the ITC opened a portal on its website enabling companies to submit petitions to include particular goods in the MTB. Petitioners will have a 60-day window (from October 14, 2016 until December 13, 2016) to submit their petitions to the ITC. The window for submitting petitions to get goods into the MTB is expected to close after December 13, 2016.

Thereafter, the ITC will issue a report providing the public with an opportunity to comment on the various petitions. After the comment period closes, the ITC will release a preliminary report and a final report, incorporating the ITC’s own analysis of the petitions and its recommendations as to whether the submitted goods should qualify for inclusion in the MTB.

In addition to the ITC’s analysis, a number of other government agencies will be involved in the vetting process. The Department of Commerce will review each submission and establish a position on each proposed product’s MTB eligibility. Customs and Border Protection (CBP) will determine if the language describing the proposed goods is administrable for imports. Also, the U.S. State Department, the Office of the U.S. Trade Representative and other possibly affected government agencies will have an opportunity to review the proposed legislation and comment accordingly.

After the various agencies analyze the proposed legislation and supporting materials, the ITC will gather the successful products into a single bill (the actual MTB with individual line items, each describing a specific product or product group), which will go to Congress—the House Ways and Means Committee and the Senate Finance Committee—for final review. Committee members will not be able to add any products to the list of proposed MTB goods (a significant departure from the past process), but may exclude a product for virtually any reason (for example, a recommendation by the ITC, domestic opposition or an objection by a member of Congress).

After the MTB is reported out of committee, Congress will vote whether to pass the legislation (the new MTB) in its entirety without any amendments. Assuming that Congress passes the MTB legislation, the bill will go to the president for his or her signature, and shortly thereafter it will become effective.

Although the ITC is still finalizing the new MTB process, the timeline below provides companies with an overview of the expected key action items and anticipated dates for a successful outcome.

Timeline:  The New Miscellaneous Tariff Bill Process

tarrif-bill-process-timeline

How To Submit A Petition To Get A Product Included In The MTB

In order for a product to be accepted for consideration as part of the MTB, the petitioner must create a web account on the ITC website. ITC instructions for creating a web account can be found in the Federal Register and/or on the ITC website. Using that web-based account, an entity will submit a petition to the ITC requesting a certain product to be considered as part of the new MTB.

The petition must include:

  1. The petitioner’s name and address.

  2. A statement as to whether the petition provides for an extension of an existing duty suspension/reduction or provides a new duty suspension/reduction.

  3. A certification that the petitioner is a likely beneficiary of the proposed duty suspension/reduction.

  4. An article description for the proposed duty suspension/reduction to be included in the HTSUS.

The ITC also requests that petitioners include the following information, to the extent possible:

  • The tariff classification of the article under the HTSUS;

  • A Customs and Border Protection classification ruling;

  • A Customs entry summary (Form 7501) indicating where the article is classified in the HTSUS;

  • A brief and general description of the article;

  • A brief description of the industry in the U.S. that uses the article;

  • An estimate of the value of imports of the article for five calendar years after the calendar year in which the petition is filed (including an estimate of the total value by the petitioner and any other importers, if available);

  • The name of each person that imports the article, if available;

  • A description of any domestic production of the article; and

  • Other information as the ITC may require

The process identifies what the MTB petition “must” have and what it “should” have to the extent possible.  Nevertheless, for a successful outcome, importers seeking an MTB duty preference should strongly seek to provide all of the “should” information, if possible.

Also keep in mind, members of Congress can have a product removed for virtually any reason, so keeping affected members in the loop and garnering their support still makes sense.

If you’re interested:

  • Be aware of the 60-day window closing December 13, 2016 and the information needed to submit a petition. Start now identifying and gathering the information.

  • Think strategically. How narrowly or broadly should you describe the proposed goods? How should you describe the industry? How will you collect the necessary data and information? The answers to these questions may be the difference between a successful petition resulting in substantial duty relief versus a petition that is rejected due to opposition or incompleteness.

  • Can you participate as part of a group or industry association? If so, this will decrease the workload for individual companies, increase access to needed industry information and provide additional support guarding against a political or domestic industry objection.

Robert Stang is a partner in the international trade and supply chain practice at Husch Blackwell. He focuses his practice on customs and international trade and brings over 30 years of experience to a wide range of issues affecting inbound and outbound goods, including tariff classification, valuation, country of origin and marking matters, free trade agreements and special trade programs. A member of the firm’s Technology, Manufacturing & Transportation team, Stang works with importers and exporters proactively to achieve cost savings and structure programs that meet CBP “reasonable care” requirements. He handles supply chain security issues, including Customs-Trade Partnership Against Terrorism (C-TPAT) matters and regularly assists importers facing CBP audits, penalties, seizures and other agency enforcement activities.